Three telecom trends to watch out for in 2023, according to CLSA

Brokerage firm CLSA believes that 2023 would be significant for India’s telecom sector and suggested investors to keep an eye on three key trends this year.

Secondly, CLSA said that 2023 would see 5G rollouts and monetisation led by top-end subscribers. It added that the sector should also be prepared for government rules on direct 5G spectrum to enterprises.

And lastly, CLSA said 2023 would also be a decisive year for Vodafone Idea Ltd to ascertain its position as a viable third player in the Indian telecom sector.

Shares of Vodafone India have slumped to a 52-week low on Monday after banking sources told CNBC-TV18 on Friday that lenders led by State Bank of India are not in favor of granting fresh loans to the company.

CLSA has a sell rating on Vodafone Idea with a price target of Rs 6.

The year 2023 should also see some other big events in the telecom space like finalisation of the new telecom regulatory bill, further rollout of 5G across the country, tariff hikes, and the possible initial public offering (IPO) of Reliance Jio, said CLSA.

It reiterated that Bharti Airtel Ltd. was its top pick in the telecom sector. CLSA has a ‘buy’ rating on the stock with a target price of Rs 1,040. Earlier, CLSA had raised its target price for Bharti Airtel to Rs 910 from Rs 863.

CLSA expects an Average Revenue Per User (ARPU) of Rs 236 for Bharti Airtel by financial year 2025, as it targets the figure to be close to Rs 300 in the long term.

Additionally, Indus Towers was also downgraded by CLSA to outperform from its earlier rating of buy. The brokerage also slashed its price target lower to Rs 215 from Rs 245 earlier. It cited delays in the Vodafone Idea fund raising as one of the key reasons behind the downgrade.

Another stock that was downgraded by CLSA was Sterlite Technologies, due to its rising debt, despite the acceleration in digital networks globally. CLSA downgraded the stock to outperform from buy with a new price target of Rs 200.

Shares of Bharti Airtel are among the top gainers on the Nifty 50 index, trading with gains of over 3 percent. On the other hand, Indus Towers is trading lower with cuts of over 1 percent. CNBCTV18